Demands of competition and WTO rules lead to a proposal that will let any company produce handsets China is poised to liberalise the mobile-phone manufacturing industry by scrapping its six-year-old licensing system to allow any company to produce handsets. The National Development and Reform Commission is working with the Ministry of Information Industry to draft new guidelines. In the near future, domestic and foreign firms that want to make mobile phones will be required only to go through ministry and commission vetting procedures. 'There will be some basic entry barriers and requirements, but there won't be any limit on number of companies,' said Wang Bingke, the director of the ministry's economic operation department. As long as companies meet criteria such as research and development capability and investment scale, they will be allowed to produce mobile phones in China. 'It goes against the trend of changing market dynamics and China's commitments to the World Trade Organisation if we don't open the door,' said Mr Wang, adding that many companies with good products and operations were denied from taking part in the business because of licensing restrictions. 'The new policy will allow market mechanisms to function properly,' Mr Wang said, pointing out that it could also spell the end for some smaller players that lacked scale and product development capability. The liberalisation of the industry coincides with the ministry's plans to issue its long-awaited third-generation (3G) mobile-phone licensing policy this year. Minister of Information Industry Wang Xudong yesterday broke his silence on the subject, telling a national conference that the ministry was working with the relevant government departments on the policy. He offered no other details. Ann Liang, Gartner Asia Pacific wireless and mobile principal analyst, said that with 3G licensing under way, it was critical for the mainland government to open the door for the mobile-phone manufacturing industry. '3G is getting popular in Europe and Asia. China can't delay any longer,' Ms Liang said. The ministry introduced licensing for the manufacture of mobile phones in 1998 to help nurture the industry. In all, 37 licences were granted to 24 vendors to produce GSM and CDMA phones in China before the government stopped issuing them 21/2 years ago, putting between 10 and 20 companies out of business. These included the country's largest telecommunications equipment supplier, Huawei Technologies, which has formally applied to the regulators to be allowed to enter the market. Huawei says it has been experiencing slower growth in domestic sales partly because it does not have a licence to produce mobile phones. 'We have recorded some growth in the domestic market, but it was much less impressive than the overseas markets because we're not participating in both mobiles and xiaolingtong [the intra-city wireless-phone system] businesses,' Huawei spokesman Fu Jun said. Last year, Huawei recorded 56 per cent growth in sales revenue to US$5 billion, but most of it came from overseas markets. The firm saw international business more than double to US$2.28 billion, contributing almost 70 per cent of last year's growth.